Employer Credit Checks: Poverty Traps Versus Matching Efficiency

• 成果类型: Article
• 署名作者: Corbae, Dean; Glover, Andrew
• 署名单位: University of Wisconsin System; University of Wisconsin Madison; National Bureau of Economic Research; Federal Reserve System - USA; Federal Reserve Bank - Kansas City
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdae095
• 发表日期: 2025
• 页码: 1661-1698
• 关键词: quantitative theory; insurance markets; consumer-credit; equilibrium; fluctuations; unemployment; INFORMATION; duration; savings; search

摘要

We develop a framework to understand pre-employment credit screening as a signal from credit markets that alleviates adverse selection in labour markets. In our theory, people differ in both their propensity to default on debt and the profits they create for firms that employ them; in our calibrated economy, highly productive workers have a low default probability. This leads firms to create more jobs for those with good credit, which creates a poverty trap: an unemployed worker with poor credit has a low job finding rate, but cannot improve her credit without a job. This manifests as an endogenous loss inpresent-discounted wages that is typically taken as exogenous in quantitative models of consumer default.Banning employer credit checks eliminates the poverty trap, but pools job seekers and reduces matchingefficiency: average unemployment duration rises by 2 days for high productivity workers and falls by 13days for low-productivity workers